End of an oil era?

Just as the 20th century will be remembered as the age of oil, the 21st century possibly may be recalled as the age when humans, however reluctantly and painfully, learned to live with less oil, writes William Rees-Mogg today in the Times (of London).

In the view of some oil market analysts, statistics are trending in that direction. In 2003, for example, a barrel of Brent crude sold for $29, rising to $38 in 2004, $54.50 in 2005 and $65 in 2006. Only recently, the price closed at $77.50, and there is reason to contemplate a rise to $80 “quite shortly,” Rees-Mogg believes.

Among some oil pundits, this raises again the specter of peak oil, the persistent concern that humanity already has extracted the most accessible oil out of the earth. If this proves to be true — though, in all fairness, some skeptics place heavy emphasis on if —humanity will soon be drawing from a supply that no longer is as readily replenished as in previous decades.

The International Energy Agency contends that this peak will be reached in only 4 years, though more optimistic predictions do not foresee this coming until 2020 (perhaps not so optimistic an estimate when one considers this is only 12 years away).

Nevertheless, skeptics offer plenty of reasons for discounting this pessimism. For starters, oil supply issues are highly complex. Moreover, emerging technologies may end up solving some of the problems in the foreseeable future, including the development of Canadian tar sands and enhanced U.S. oil recovery techniques. And besides, all types of forecasting, from financial to weather prognosticating, have often turned out to be way off the mark. And skeptics stress that this latest round of forecasting may prove just as faulty.

Even so, the sheer fact the oil supply no longer is keeping as steady a pace with demand holds major implications for the United States and other western countries in terms of its effect on technology, the balance of power, the world economy, and society in general, Rees-Mogg maintains.

Perhaps just as ominous is the fact there are no quick fixes to this problem — something our own renewable energy expert has stressed time and again. Indeed, a common mistake among many Americans is assuming that some energy technology lies just over the horizon that will replace prevailing oil technology and that will serve humanity just as efficiently. Not true, says Mark Hall, the Alabama Cooperative Extension System’s renewable energy specialist, who stresses that the path to energy self-sufficiency likely will be bumpy and uneven for the foreseeable future.

Simply put, there is no magic pill, Hall says. Rather, the solutions will involve multiple strategies and technologies, all of which will be greatly affected by the warp and woof of market forces and government-sponsored incentives.

Hall says government will necessarily be an essential player in this strategy. Much of this will involve finding effective strategies for keeping Americans focused on the long-term goal of energy self-sufficiency — strategies that necessarily will encompass incentives to ensure that alternative energy technologies survive beyond the initial development stage.

Part of this strategy also will involves steps to ensure that renewable energy prices remain high enough to attract investors —a guarantee that only governments are able to provide during this critical stage.